President Joe Biden is expected to sign an executive order directing federal agencies to "develop recommendations" to raise the minimum wage of federal workers to $15 an hour and eventually include private contracts who do work for the federal government. CNBC's Steve Liesman reports. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi
With Joe Biden’s inauguration as president of the United States, the country is perhaps closer than ever to a $15 federal minimum wage.
In a speech last week, Biden outlined his $1.9 trillion American Rescue Plan, which will send aid to those hit hardest by the coronavirus pandemic. Under the plan, Biden will call on Congress to raise the federal minimum wage to $15 per hour from the current $7.25. The federal minimum wage has not been increased since 2009.
While boosting the federal minimum wage to $15 is popular among some lawmakers, activists and consumers, it still faces a lot of opposition to becoming law.
In 2019, the U.S. House of Representatives passed the Raise the Minimum Wage Act, which would have incrementally increased the hourly wage each year, reaching $15 in 2025. But then-Senate Majority Leader Mitch McConnell, R-Ky., blocked it.
Even though Democrats now have a slim majority in both the House and the Senate, it’s not a given that Congress will be able to pass it as proposed, and the $15 wage is a sticking point for a number of lawmakers.
“If the federal government mandates a universal $15 minimum wage, many low-income Americans will lose their current jobs and find fewer job opportunities in the future,” said Sen. Pat Toomey, R-Pa., in a Friday statement.
Can a $15 minimum wage be passed via reconciliation?
Democrats could potentially use budget reconciliation, a legislative tool, to pass the bill by a simple majority and avoid a Republican filibuster. Sen. Elizabeth Warren, D-Mass., on Friday seemed to reference using reconciliation to pass a $15 minimum wage.
“If the Republicans want to drag their feet while working families struggle, the Democratic majority should use every legislative tool available to pass it,” she tweeted.
To be eligible for reconciliation in the Senate, policies must be tied to the budget and impact outlays and revenue — they can’t be incidental. Democrats could potentially argue that a higher federal minimum wage does have a direct effect on the budget, but it’s unclear if that will work or if that’s the route they will take, said Sarah Binder, a political scientist at George Washington University and the Brookings Institution.
“There’s an outside chance you could do it through reconciliation, but I think what I take away from this is, in fact, you need a supermajority and Republican support to get this done,” she said.
Democrats could decide to take the $15 minimum wage provision out of any bill they may pass through reconciliation and attempt to pass it as a stand-alone or with other legislation. If they do that, however, they’d need all 50 Senate Democrats to agree on the legislation and votes from at least 10 Republican senators, said Steven Smith, a political science professor at Washington University in St. Louis.
That’s unlikely, he said.
“The Senate Republicans are a pretty conservative lot,” he said. “Once you get beyond three or four of them, you probably can’t find votes for it.”
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